6 Secrets to Smart Home Financing

One of the major goals we have in life is buying our own house. With a stable financial status coupled with emotional readiness to start a new life in your chosen neighborhood, it is indeed the right time for you to delve into the twists and turns of getting a home loan.

Getting a home loan is definitely a huge step that we are going to take and as they say, with great decision entails great responsibility. For starters, you must consider factors like down payment—which will require 20 percent of the purchase price of the home to avoid paying private mortgage insurance—and closing cost—which runs between 2-5 percent of the purchase price. Then follows acquiring a good credit score of at least 650 to get a conventional mortgage, not to mention, the actual monthly mortgage payment that you need to secure.

With that ton of responsibility, you might think of stepping back for a moment before getting a house. But fret not, there are creative ideas of getting a home loan we will share to you and the good news is, you are just six options away to getting that “home sweet home.”

Seller Financing In a wide and competitive getting a home loan deals, an offer where the lender is the seller is rare to find so you have to keep a sharp lookout if you choose this option. With this deal, you will be paying mortgage directly to the seller and you must also expect to either pay a high interest rate or a substantial down payment to get the seller on board with the deal. Typically, seller-financing deal comes from owners who are having a difficult time selling their home. The house is paid off but these homeowners can't afford to make needed repairs and since the house cannot be sold in its present condition, so they offer seller financing to make the deal available to buyers who don't qualify for a traditional loan. The buyers will need to sign a promissory note where the agreed upon payment scheme is listed.

Rent to Own Opting for a Rent to Own deal gives you, as what the name suggests, the choice to buy the house if you become a tenant. The usual rent-to-own setup is renting the place for three years while you work and improve your credit scores and save up for a down payment. Afterwhich, you can now buy the house.

Retirement Account Another option you can seek if you are going to buy a house is borrowing money from your retirement account. Individually, you can borrow up to $10,000 and if you are married, you and your spouse can both borrow this amount for a total of $20,000. However, borrowing from your retirement account has a deadline of 120 days for you to buy a home. Plan ahead and make sure you have the house of your choice to avoid penalty charges and any tax that's due.

Borrow Money One of the easiest way to getting a home loan is borrowing money from a friend or family member who is capable of that big sum. Also known as a private mortgage, this type of loan works like loans from a bank or as any credit union would where you form and sign a contract.

Crowdfund Crowdfunding is one way to get a source of fund publicly. Sites like GoFundMe or Kickstarter provides this kind of service where you can post and start raising money by donations from other people. Meanwhile, fundraising sites specifically made for buying houses also exist such as Hatch My House and Feather The Nest. There, you can collect a significant amount that may aid you in getting a home loan.

FHA Loan The Federal Housing Administration (FHA) is a government agency that works under the US Department of Housing and Urban Development (HUD) to back loans to borrowers who are not qualified for a convention loan from a bank, credit union, or mortgage lender. The FHA requires you credit score of only 580 to qualify for a loan, and your down payment can be as little as 3.5 percent. In some cases, they might even allow you to get an FHA loan with a credit score of as low as 500 if you pay 10 percent for the down payment.